The 2024 Mexican general elections, held on June 2, saw Claudia Sheinbaum elected as the country’s first female president, continuing the Morena party’s dominance under outgoing President Andrés Manuel López Obrador. Prior to this, López Obrador introduced sweeping judicial reforms allowing the popular election of judges, raising investor concerns over the erosion of judicial independence and weakening checks and balances. This shift threatened legal predictability and the attractiveness of foreign investment. As a result, Mexican equities lost close to 20% in USD, underperforming other emerging markets by 35% YTD.

However, the LBRTY® Emerging Markets strategy remained insulated from this turmoil. Since 2019, the LBRTY investment process had blacklisted Mexico due to its Civil Rights and Democracy (CD) rating falling below the investable threshold, driven by declines in government functionality and democratic culture. Consequently, the LBRTY® EM strategy avoided direct exposure to Mexico’s equity downturn in 2024, protecting investors from significant losses while maintaining a focus on mitigating authoritarian risks.